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Eurostat released its provisional inflation figures for the eurozone last Thursday \u2013 and the tidings were not good at all. Average inflation appears to have risen from 2.6% in March to 3% in April, fueled by the fallout from the US-Israeli war on Iran. But things were even worse for Greece: Eurostat estimates that inflation shot up to 4.6% in April from 3.4% in March. To paint a general picture: The lowest inflation rates were recorded in Finland (2.3%), Malta (2.4%), the Netherlands and France (2.5%). Greece was among the five European countries with the highest inflation \u2013 with our neighbor Bulgaria in first place at 6.2%. What is the reason for this big divergence? What is wrong with it?<\/p>\n
A look at the official data allows us to see what is really happening and why: In the five-year period between 2020 and 2025, wages per employee increased in real terms by 16.7%. In the same period, labor productivity (also calculated in constant prices) increased by 7.8%. The difference between these two variables would justify an average increase in prices of 8.9%.<\/p>\n
\nThe Consumer Price Index increased by 20.9% in five years due to the increase in profits. In other words, we have profit inflation<\/p>\n<\/blockquote>\n
The Consumer Price Index, however, increased by 20.9%. What is the reason for the difference of the additional 12 percentage points? The answer that emerges \u2013 not from some complex reasoning, but from the official figures themselves \u2013 is straightforward: It comes down to an increase in profits. In other words, we have profit inflation.<\/p>\n
It seems price increases in raw materials and energy are being seen as an opportunity to expand absolute mass and profit margins. This is largely due to what reputable economic research organizations, including the Foundation for Economic and Industrial Research (IOBE), characterize as the inherent problem of our internal market \u2013 weak competition \u2013 or, in other words, the dominance of cartels in larger parts of the internal market. In previous years, this phenomenon had been observed and criticized by the Bank of Greece.<\/p>\n
Inflation is neither a natural nor a neutral phenomenon. On the one hand, it helps produce fiscal surpluses thanks to inflationary revenues from high value-added tax rates and from the non-indexation of the tax scale, giving the government an opening to distribute some benefits.<\/p>\n
On the other hand, it emerges as the main mechanism for redistributing income at the expense of wage labor and in favor of profits. Therefore, what would have seemed impossible under normal circumstances has become possible \u2013 and, in such a short time, without even mass reactions: Income from profits in 2019 was \u20ac21.3 billion above income from work, and in 2024 this spread reached \u20ac36.1 billion, meaning the difference grew 69.5% to the detriment of labor.<\/p>\n
Around herein lies the answer to the question of why the government insists on doing nothing to address high prices: Because it benefits some people.<\/p>\n<\/p><\/div>\n